My first trade was a short at 12922… the market had already come off a 50% Fib level and I was thinking that it had further to go. I had missed the move as it fell (as I had only got in at 6.30pm GMT)..  I quickly opened the short but didn’t check to see that the stochastics had almost reached the oversold level. This was frustrating as I sold right at the bottom. The market went up and hit my stop for -18!!

Anyway, second trade, I was a bit more cautious. The stochastics were picking up momentum towards the upside in both the 1 and 5 minute charts. I went long at 12943. It went up, then down below my entry price but the 5 min stochastics were still looking good.. it was a few points to my stoploss but it turned and shot up. I took profit at 12969 as the stochastics looked overbought. This was the perfect intraday close as the market then went south again hitting a low of 12958! I got 26 points.

The third trade I was in two minds. I felt that I saw a top when the price action fell below 12980. I watched it go lower for confirmation and then I entered a short… with spreadbets you can get a bad price and I got my short at a crappy 12968. I was wrong here and the market shot up taking me out at 12985 for -17! Arrgh!

Then as the market edged higher and lower, I felt there was a top here again, the stochastics in the 5 mins were looking to make their turn below the 80 line… I felt this was a good opportunity and shorted at 12973 with a stop at 12995.

This last trade is still going as I write and so far it’s not looking so good… the price action is at 12985 currently. The problem with picking tops and bottoms is that most of the time in doing so, you lose big time. Price will do what it wants to do and not what you think it will do. I think I wrote just the other day that indicators are formed from the price action and are secondary to what is actually happening.

If you do manage to pick a top or bottom, the rewards can be fantastic. That feeling that you outwitted the market and entered the perfect short at a top or the perfect long at a bottom is exhilarating but in truth, that trade was probably more luck.

Unfortunately, I thought I saw a top here and shorted… not just once but twice and got stung. I know all the trading sayings and they are all true but in the heat of the moment, one seems to forget them all.

The trading axioms which come to mind are:

“Trade what you see, not what you think!”

“Trade with the trend”

“Cut your losers, ride your winners”

“Don’t try and pick tops and bottoms”

I think I failed all of these today with the last two trades. Ho hum!! Back to the drawing board!

My trade wasn’t a bad one, I had traded on break of the channel. Luck wasn’t on my side this time…. as I write, the market has broken up above the upper trend channel. If I had bought this, I could have grabbed 25 prices. However, as I had already reached my loss limit for the day, I stopped trading!

On FOMC days and other news days, you have to be aware that the technical indicators don’t necessarily work as well as they should… it’s all about about trading on momentum. The big players know where people’s entries and exits are and will try and get you where they can!

Anyway, there’s nothing getting in the way of me and my trading. I came back usual time today and shorted when I saw that the stochastics were turning.. I got in a bit late with an entry at 136175 and rode it to the round number 136000 for 7 prices. Nothing special!

The market actually went lower and I left a bit on the table. At this stage, about 19:15 GMT, I was looking for a long trade (see blue arrows on chart). The stochastics in the 5 mins were looking to turn and I had targetted 136225… if I had traded this, it would have yielded some profit! Drats!

Anyway, nevermind…  my third trade was a short below the day low at 135300.. 3 prices below the low. I took profit at 135150 for 6 prices which was a bit premature as the market fell lower, all the way to 134575.. double drats!

Anyway, in profit overall today at +13.

There was no real movement today, market just bounced about doing nothing in particular..

 I’ll be back tomorrow!

Although I ended up down today, I didn’t feel all that frustrated. I felt that I was able to read the market. I did make some mistakes and I’ve learnt my lesson.. I hope that I don’t make those mistakes again. In fact, if it wasn’t for those mistakes I would be up quite nicely.

Anyway, as there was a lot on in the trading day and I made quite a few trades, I have annoted the chart with numbers so you know where I am with my thinking and analysis.

Ok, here goes:

Note: blue arrows are theoretical entries, red arrows are shorts, green arrows are longs

1. Ok, the market here fell through 134000 and spiked up again, the 15 mins were showing the stochastics were over sold and at some point looking to turn up. When the market went above 134000 again, I placed an order in the market at this level to go long. I was aiming for 134500 or so. The market came within 1 price of my entry and did shoot up beyond 134500.. in fact, it reached 134750. I was a bit frustrated that I had missed the entry but if it got hit, it would have been a wonderful 20 prices.

2. When the market had eased off from bouncing off 134750, I saw that the stochastics in both the 5 and 15 mins were still on the long side. I went long at 134525 with a target of 134950 (which if you look at the 15 mins is the exact 50% Fib level). Unfortunately, I got chickened out here thinking that the market was going to bounce at the round number 134800 and so I took profit here for +12.

3. Prior to the set of 3 trades comprising of step 3.. I was in profit and felt good about my analysis from step 1 (even though it had not triggered). The next 3 trades were countertrend trades.. I thought that the market would bounced at each of my 3 entries. In fact, they would do so initially and then slam down.. I was anticipating a cross of the stochastics in the 5 mins each time as the indicator was almost ripe for reversal. However, what I didn’t take into account was the stochastic reading in the 15 mins was firmly down. I wasted 3 trades here which totalled -25 loss!! Ouch!

4. The countertrend play finally worked… and I got in and took back 11 prices. At this stage I was -2 for the day.. not a particularly bad loss. However, the 15 min stochastics hadn’t turned yet so this probably wasn’t a good trade in hindsight.

5. This looked like a consolidation in the 5 mins before a move upwards… I took it. The 15 mins weren’t signalling a long so I should have left this one. This was a 10 price loss.

Then I spoke to my trading mentor and I talked to him about my trades. If you look at the 15 mins chart, you will see how choppy the market really is.. he said that it would be better to leave the market for the day… he was surprised that I hadn’t racked up any higher losses considering the days movements.

6. If I were to trade for the day, I saw an entry here. The market made a double bottom in the 5 mins but the stochastics were showing a higher level.. positive divergence. This would have been a good entry if I had taken it. The exit would have been at point 7 when the stochastics crossed.

So, even though it was a losing day, I felt pleased with my progress. I was able to interpret the market and my fear levels (though still there) weren’t so prevalent as before!!

Gee, a very long winded post.. enjoy the rest of your weekend!

However, I didn’t as the stochastics were moving upwards in the 5 mins. The 15 mins were showing the chart in oversold territory which made me cautious about trading it. Therefore, conflicting signals in the pattern of the charts here with the indicators.. it’s best to stay out when this happens.

Just so happens that the stochastics were the winners in predicting where the market was heading. The market made a choppy move upwards.. it may reach a certain level and then fall but until it agrees also with the 15 mins, I don’t want to take the risk.

As I write the market has hit 135775 and is bouncing off it.. this is also the top of the bollinger band in the 5 mins and also the 50 day MA line.. these will serve as resistance levels and could be the level in which the market turns and heads lower… ok, the market has now moved lower, the stochastics have now crossed and issuing a sell signal… I would enter here if the 15 min stochastics were not in oversold territory and expecting a pullback at some stage.

 I am following the charts here and if I had shorted where I mentioned, I would have done well! There was another entry when the market broke below the day low..

Ok, the market broke lower and then bounced upwards, I put in a short entry at 135150 and this got taken. My stop was 135300 with a target of 134825. Unfortunately, my stop got hit for -6.

After this move, I still felt that the markets were going lower and I shorted again near here at 135175 with a stop at 135350 and target 134800. I was purely trading on the fact that the market had fallen below the intraday low and I was expecting that this was the pullback before further moves downwards. I had not taken stochastics into consideration at this point… disappointingly, my stop was once again hit for -7.

The stochastics told the way and I failed to listen. The 5 mins and finally the 15 mins charts are showing a buy signal now.

I have ended up -13 down.. I need to keep objective and trade what I am seeing.. the stochastics have worked well for me in the past, I shouldn’t override their value.

The stochastics in the 5 and 15 mins were both in overbought territory which gave me confidence in the trade. My initial target was 136225 which was just above a previous swing high made at 17:10 GMT. I chickened out however and manually closed at 136300 for a +11 price profit.

The market 5 seconds later went to hit my target!!! Arrrgh!

Anyway, I was dead proud of my profit and didn’t want to lose it.. if I leave it now, it means that I have made it a second successive winning day on the live account..  these are unchartered waters!!

For fear of losing, this paralysed me to make further trades…

When the market bounced off 136100 at around 19:10 and pulled back to 136400.. the stochastics were still signalling a short. I wanted to short at 136300 with a target of 136050, stop loss 136425. The fear of losing was too strong and I didn’t trade this.. it would have been a winning trade and netted another 10 prices.

Anyway, at least I didn’t lose I suppose..  once again the dreaded trading psychology reared it’s ugly head! I guess it’s about confidence.. the more comfortable I feel, the less fear of my own skill as a trader should allow me to pull the trigger.

At the time of writing this, the market made a triple top, retraced and now making new highs for the day.

I had an order to go long at 135050 which was the previous swing low.. however, the market bounced off 135100 and moved to above 135600 as I write. I would have taken profit around 135500 if I had got in at my desired level! 

Of course, it’s all hindsight and trading is extremely easy when you look back on charts.

However, the patterns today I felt adhered to my trading strategies.

So far, I have two profitable days to my name whilst trading live and I felt today would have been another which would have helped towards making back those previous losses I had on the live account.

As a result, I was extremely cautious in my trading… this can be a good and bad thing.

My first trade was a short at 134000..  I was so eager not to loose that I close the trade early for a net zero amount when it looked like it was going to go wrong on me. However, when I thought that the market was definately going to go down again, I shorted again but this time got a worse price at 133950.

I rode this to 133725 which was just above the round number and also near some MA lines on the 5 min chart. However, the market fell to 133500 or so.

When the market bounced off 133500, I was tempted to enter long. However, thinking of my positive +10 price profit from my earlier trade, I really didn’t want to lose any profit so I left the trade. This was really unfortunate as the price rallied from this mark… this is the blue arrow on the chart… you can see the stochastics turning in the 5 mins.. however, 15 mins at this stage was still showing a short.

I could have ended the day with +20 or so prices if I was less cautious but I felt that I really couldn’t take the risk of losing today. In other words, trading psychology affected me again today. To be a successful trader, one must be able to take all trades regardless of what has happened.

In addition, I also placed a trade to short the Dow Jones at 121650.. this was a perfectly good entry and I would have managed to grab some profit or move my stop before it reversed. However, I chickened out and close a little above my entry price. I had felt fear and close the trade prematurely result in a loss.

Overall, I felt rather disappointed with myself. My entries were rather good I felt in these two cases, just my psychology to hold was rather bad.

There was a bad trade on my second Emini short (mentioned in previous article when I shorted at the worst possible place)… that was a result from the frustration of being stopped out of the first trade.

Anyway, here’s the pic of the Dow Jone short trade.. note where I had shorted and then closed, then it dropped where I could have grabbed a good 20 points or so!